African Rainbow Minerals Limited · JSE:ARI
African Rainbow Minerals — 1H F2023 Earnings Presentation
39 slides from African Rainbow Minerals's earnings presentation, Mar 6, 2023
Slide 1: Interim results for the six months ended 31 December
Interim results for the six months ended 31 December We do it better 6 March 2023 1
Slide 2: Chairman's quote on headline earnings and interim dividend
“ Headline earnings for 1H F2023 increased by 40% to R5.2 billion (1H F2022: R 3.7 billion) and we declared an interim dividend of R14.00 per share. Our financial position remains robust with net cash of R9.6 billion at 31 December 2022, after settling the acquisition price for Bokoni Mine in cash.
Slide 3: Disclaimer
Disclaimer Throughout this presentation a range of financial and non-financial measures are used to assess the company’s performance, including, but not limited to financial measures that are not defined under International Financial Reporting Standards (IFRS). These adjusted financial measures are
Slide 4: Overview of results
Overview of results Dr Patrice Motsepe Executive Chairman Black Rock Mine Operations we do it better
Slide 5: Safety and health
Safety and health Lost Time Injury Frequency Rate (LTIFR)* Total Recordable Injury Frequency Rate (TRIFR)** 22% to 0.28 5% to 0.62 (1H F2022: 0.36) (1H F2022: 0.67) * LTIFR per 200 000 man-hours ** TRIFR includes the number of fatal injuries, number of lost time injuries and number of medical cases
Slide 6: Headline earnings
Headline earnings ARM Ferrous ARM Group (R million) 4% to 7 000 R2.5 billion 6 000 28% (1H F2022: R2.4 billion) 1 075 5 163 8 5 171 5 000 (131) 85 92 ARM Platinum 346 4 042 4 000 3 696 7% to 3 000 R1.3 billion 2 000 (1H F2022: R1.2 billion) Increase Decrease 1 000 ARM Coal 0 1H F2022 Net re- 1HF2022
Slide 7: Six-monthly headline earnings (R million)
Six-monthly headline earnings* (R million) First half (1H) 8 025 8 000 7 642 Second half (2H) 6 000 5 171 5 039 4 000 3 696 3 379 3 025 2 201 2 155 2 000 0 F2019 F2020 F2021 F2022 F2023 Total annual: 5 226 5 534 13 064 11 338 * The F2019 to 1H F2023 headline earnings include re-measurement gains and
Slide 8: Dividends per share (cents)
Dividends per share (cents) 2 500 Interim dividend per share Final dividend per share 2 000 2 000 2 000 1 500 1 400 1 200 1 000 1 000 900 750 700 500 500 400 250 0 F2018 F2019 F2020 F2021 F2022 F2023 Total annual: 1 300 1 200 3 000 3 200 We are committed to balancing growth and dividends while maint
Slide 9: Dividends received
6 Dividends received 1 3 Dividends received from Assmang Distributions received from ARM Coal R3.5 billion R1 144 million2 (1H F2022: R3.5 billion) 1H F2022: nil 1. Post the period end, Assmang declared a dividend of R3 billion (100% basis). 2. Refers to distributions received as part settlement for
Slide 10: Segmental EBITDA split by commodity (%)
Segmental EBITDA split by commodity (%) (R million) 8 042 9 336 11 009 24 321 17 839 7 795 110% 1% 3% 2% 3% 4% 1% Other* 5% 4% 4% 12% 90% 19% 29% 12% 15% Coal (GGV) 38% 70% 46% 46% 39% 32% Manganese 50% 54% 37% Iron Ore 30% 46% 42% 44% 37% PGMs 10% 19% 16% (3%) (4%) (3%) (10%) F2018 F2019 F2020 F202
Slide 11: Deliver competitive returns and create sustainable value
STRATEGY Owner-operator DELIVER COMPETITIVE RETURNS AND CREATE Entrepreneurial SUSTAINABLE VALUE management FOR ALL STAKEHOLDERS Operate Investing in Focus on our portfolio our employees value-enhancing of assets safely, and integrated responsibly and efficiently growth Partnering with Allocate capi
Slide 12: Growth projects
Growth projects Definitive feasibility study progressing Plant commissioning in Q3 F2024 well and is expected to be completed June 2023 Capital costs for the project increased by R1.5 billion owing R1 billion of capital to deliver early to scope changes and ounces using existing infrastructure geote
Slide 13: Strong PGM growth expected
Strong PGM growth expected (thousand 6E PGM ounces – attributable to ARM) Total: 299 420 485 548 652 700 118% increase 600 244 500 128 65 400 37 138 141 143 300 134 128 103 96 90 200 73 100 171 176 179 183 175 0 F2023e F2024e F2025e F2026e F2027e Two Rivers - UG2 Two Rivers - Merensky Modikwa Bokoni
Slide 14: Operational review
Operational review Chief Executive Officer: Mike Schmidt Khumani Mine we do it better
Slide 15: Headline earnings/(loss) by division / operation
Headline earnings/(loss) by division / operation (R million) 1H F2023 1H F2022 % change ARM Ferrous 2 520 2 428 4 Iron ore division 1 663 1 889 (12) Manganese division 861 559 54 Consolidation adjustment and other (4) (20) 80 ARM Platinum 1 330 1 245 7 Two Rivers Mine 920 725 27 Modikwa Mine 615 594
Slide 16: EBITDA margins by commodity (%)
EBITDA margins by commodity (%) 67% Coal (GGV)* 58% 51% PGMs** 51% 46% Iron ore 46% 26% Manganese alloy 30% 21% Manganese ore 30% 1H F2022 1H F2023 *Excludes any re-measurement adjustments. **Including Modikwa and Two Rivers mines only. 16
Slide 17: ARM Ferrous
ARM Ferrous Black Rock Khumani Mine Mine we do it better
Slide 18: ARM Ferrous
ARM Ferrous Profit variance analysis – segment result (R million) Changes in average US Dollar prices (%) 6% 6% 872 2 971 (71) 230 3 048 (878) (76) (22%) (30%) Export 44% Export 37 % Export iron ore** High Carbon manganese ore* manganese manganese 1H F2022 ZAR:US$ US$ Prices Volume Cost of sales Oth
Slide 19: Iron ore (100% basis)
Iron ore (100% basis) Operational performance Average realised US dollar export prices decreased by 22% as Chinese steel output came under % unit 1H F2023 1H F2022 change pressure. Export sales volumes 000 tonnes 5 652 6 657 (15) Local sales volumes 000 tonnes 1 011 1 517 (33) Export sales lump:fine
Slide 20: Manganese ore (100% basis)
Manganese ore (100% basis) Local sales volumes were higher mainly due to the Operational performance sale of ultra-fines product. % Included in export sales volumes is approximately unit 1H F2023 1H F2022 change 90 000 tonnes which was transported by road to Saldanha Port. Export sales volumes 000 t
Slide 21: Manganese alloys (100% basis)
Manganese alloys (100% basis) Operational performance US dollar index price for high carbon manganese alloy decreased by approximately 30%. % unit 1H F2023 1H F2022 change Sales volumes: South African operations 000 tonnes 46 51 (10) High carbon manganese alloy production at Sakura increased by 47%
Slide 22: ARM Platinum
ARM Platinum Two Rivers Mine we do it better
Slide 23: ARM Platinum
ARM Platinum Profit variance analysis segment result* (R million) Changes in unit operating cash costs** (%) 4 000 912 151 688 3 287 2 822 3 000 (603) PGMs: (638) (45) 27% 2 000 Modikwa 1 000 PGMs: Two 22% Rivers 0 1H F2022 ZAR:US$ US$ Volume Cash Non-cash Mark-to- 1H F2023 0% 5% 10% 15% 20% 25% 30%
Slide 24: PGMs (100% basis)
PGMs (100% basis) Operational performance Lower US dollar PGM prices, were largely offset by a 1H % weaker rand versus US dollar exchange rate. unit F2023 1H F2022 change Modikwa production volumes 6E PGM ounces 146 921 152 379 (4) Two Rivers production volumes 6E PGM ounces 147 288 146 524 1 Total
Slide 25: Nkomati Mine update
Nkomati Mine update Nkomati Mine remains on care and maintenance while ARM and its partner consider various options for the future of the mine. At 31 December 2022 the estimated discounted rehabilitation costs attributable to ARM were determined to be R686 million (30 June 2022: R676 million). The i
Slide 26: ARM Coal
ARM Coal GGV Mine we do it better
Slide 27: ARM Coal
ARM Coal Profit variance analysis – segment result1 (R million) Changes in on-mine unit production costs (%) 1 500 554 Coal: PCB 24% 1 000 ( 20) ( 89) 797 120 ( 256) 488 500 Coal: GGV 12% 0 1H F2022 ZAR:US$ US$ Prices Volume Costs Other 1H F2023 0% 5% 10% 15% 20% 25% 30% Changes in sales volumes (%)
Slide 28: GGV and PCB (100% basis)
GGV and PCB (100% basis) Operational performance US dollar prices for thermal coal increased largely due to disruptions in the global energy supply % following geopolitical turbulence owing to the unit 1H F2023 1H F2022 change conflict between Russia and Ukraine. Domestic sales volumes Mt 1.74 1.75
Slide 29: Summary of key focus areas
Summary of key focus areas Increasing volumes, improving efficiencies and optimising cost performance. Addressing logistical challenges in collaboration with Transnet. Improving grades, particularly at the PGM operations. Enhanced project execution and delivery. 29
Slide 30: Capital allocation
Capital allocation Finance Director: Tsundzukani Mhlanga Modikwa Mine we do it better
Slide 31: Capital allocation guiding principles
Capital allocation guiding principles ALLOCATION OF FUNDS Invest in existing business Debt repayment Invest in growth of existing business Maintenance and Healthy gearing levels efficiency improvement create a flexible platform capital expenditure to for sustainable growth Mergers and acquisitions s
Slide 32: Analysis of cash and cash equivalents movement (R million)
Analysis of cash and cash equivalents movement* (R million) 25 000 Investing in Interest existing business and debt Shareholder Sources of funds returns Other and acquisitions repayments 3 517 199 20 000 (1 047) 5 294 (1 812) 15 000 351 (3 441) ( 211) 11 643 9 821 10 000 (3 921) ( 614) ( 137) 5 000
Slide 33: Net cash and debt (R million)
Net cash and debt (R million) 31 December 2022 30 June 2022 31 December 2021 Cash and cash equivalents per statement of financial 9 837 11 659 12 082 position* Cash and cash equivalents per statement of cash 9 821 11 643 12 066 flows Overdrafts 16 16 16 Total borrowings (289) (484) (1 026 ) Long-ter
Slide 34: Segmental capital expenditure (R million)
Segmental capital expenditure* (R million) 9 000 F2023e includes: 8 275 7 878 7 774 8 000 Two Rivers Merensky Project - R2 456 million 7 000 Bokoni Platinum Mine – R1 133 million 6 000 4 719 F2024e includes: 5 000 Two Rivers Merensky Project – R3 052 million 4 000 Bokoni Platinum Mine – R1 121 milli
Slide 35: Thank you
Thank you www.arm.co.za we do it better
Slide 36: Additional slides
Additional slides Black Rock Mine Modikwa Mine we do it better
Slide 37: Summary of re-measurement and fair value gains / (losses)
Summary of re-measurement and fair value gains / (losses) (R million) 1H F2023 1H F2022 ARM Mining Consortium (Modikwa) - - ARM Mining Consortium (Modikwa) - intercompany - - Anglo American Platinum - - Non-controlling interest - - ARM Coal (4) 18 Goedgevonden Mine (4) 259 PCB operations - (241) ARM
Slide 38: PGM Mark-to-market adjustments
PGM Mark-to-market adjustments The sales price of PGM concentrate is determined on a provisional basis at the date of sale. Adjustments are made to the sales price based on movements in the discounted forward commodity prices up to the date of final pricing. Where there are any differences between t
Slide 39: Mark-to-market adjustments (R million)
Mark-to-market adjustments (R million) Two Rivers Mine 1H F2023 1H F2022 Realised mark-to-market adjustments 32 (722) Provisional sales value 5 840 5 958 Final sales value 5 872 5 236 Unrealised mark-to-market adjustments (240) 53 Initial provisional sales recognition 1 627 1 491 Period end provisio
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